In management studies, the terms 'Business Economics' and 'Managerial
Economics' are often synonyms. Both the terms, however, involve 'economics' as a basic discipline useful for certain functional areas of business management. Economics is the study of men as they live, behave, move and think in the ordinary business of life.

Managerial Economics as explained earlier, it is the application of economic theory to business. Economic theory offers a variety of concepts and analytical tools which can be of considerable assistance to the manager in his/her decision-making practices. It doesn't mean to say that economics has all the solutions.

Demand and supply are the two terms which are most commonly used in economic analysis. The product market constitutes demand for goods and services on one hand and supply of goods and services on the other hand. Demand analysis seeks to identify and analyse the various factors that affect on the demand.

In this unit an effort, is made to explain the types of demand. There are large number of goods and services in the economy. For a meaningful demand analysis and managerial decisions it is necessary to have conceptual distinctions. An understanding of demand at different levels of aggregation is also required for making various polices. Some important demand distinction are discussed below.

The demand for a product or a service depends upon a number of factors. After the discussion of various demand distinctions in the previous unit, here various factors determining the demand are taken up to study. The factors like price. income. prices of substitutes and complementary goods etc are having the greatest influence on the sales.

Elasticity is a general measurement concept. The law of demand tells us that consumers will respond to a price changes i.e. buying more when price decline and buying less when price rises.However, it does not tells anything about the degree of responsiveness of consumers to a price change.

A forecast is a prediction or estimation of a future situation.Many business decisions are taken under some risk and uncertainty.The aim of forecasting is to some extent, reduce the risk that the firm faces. In short, the demand forecast means estimation of the demand for the good in question in the forecast period.

In Economic Theory, profits are payments for the work of the entrepreneur, as he is a factor of production like other factors. But this concept of profit has become a vexed and mixed one. Though profit is an income for the entrepreneur for his work. he is getting the income called profits.

Pricing plays an important role in profit planning . Pricing decisions are affected by the economic environment in which the firm operates. What is good price today need not be a good price tomorrow, the pricing decisions need to be reviewed and reformulated from time to time.

In the modern world the healthy profitability and the vulnerability of a sudden change in fortunes can affect the entire company. Hence, most firms are multi-product firms. Thus most firms make so many products. Keeping this in view the different production as well as marketing conditions of these products. This unit throw light upon to
the problem of multiple products.

This unit focuses on four components - i.e., Price discrimination; Joint
product Pricing; Price discounts and Government's intervention in Pricing.
Price discrimination also known as differential pricing. Price discrimination
may be defined as the act of selling the same commodity, produced under single control, at different prices to different buyers.

The determination of prices of the products is an important managerial function.Price affects profits through its effect both on revenue and cost. Total profit is the difference between total revenue and total cost. Total revenue is the sale proceeds of the firm at a single price or at different prices.

The perfect competition is defined as the form of market organization in which (1) there are many buyers and sellers of a product, each too small to affect the price of the product; (2) the product is homogeneous; (3) there is perfect mobility of resources: and (4) economic agents have perfect knowledge of market conditions.

Monopoly is a form of market structure in which a single seller or firm has control over the entire market supply, and there are no close substitutes for his products and there are barriers to the -entry of rival producers. This sole seller in the market is called "monopolist".

Monopolistic competition refers to a situation where there are many sellers of a differentiated product. There is competition, which is keen, though not perfect, between many firms making very similar products, which are close, but not perfect substitutes.

Oligopoly is defined as a market structure in which there are few sellers selling homogeneous or differentiated products. Where oligopoly firms sell a homogeneous product, it is called pure or homogeneous oligopoly. For example industries producing cement, steel, petrol, cooking gas, sugar are industries characterized by homogeneous oligopoly.

Duopoly is a limiting case of oligopoly, in the sense that it has all the
characteristics of oligopoly except the number of sellers which are only two in duopoly against a few in oligopoly. In fact, duopoly models have been used by economists as simplified models to understand the oligopolistic behavior.